Public Investment Corporation unveils landmark natural gas strategy

The Public Investment Corporation (PIC) said on Thursday it has approved a landmark strategy on natural gas, marking a pivotal step towards bolstering South Africa's energy security and accelerating the country’s decarbonisation agenda.

The PIC is a South African state-owned asset manager that invests public sector funds, primarily for the Government Employees Pension Fund. As of early 2025, it manages over R3 trillion in assets, making it one of the largest asset managers in Africa. 

The strategy is engineered to help secure a stable gas supply, directly supporting South Africa’s critical transition towards cleaner energy sources. Crucially, this initiative aligns with the National Development Plan (NDP), the Draft Gas Masterplan, and the Integrated Resource Plan (IRP), all of which advocate for significant investment in natural gas. 

The PIC said its strategy provides for direct and indirect investments into midstream and downstream regional gas projects. Each investment will be rigorously assessed on a project-by-project and risk-adjusted basis, ensuring sustainable financial returns for client investment portfolios. 

 The strategy is built upon five core components:

1. Investment in Gas Infrastructure: The strategy outlines significant potential investments in gas infrastructure to support South Africa’s transition towards cleaner energy sources. The PIC believes targeted investment in gas will further unlock other opportunities for developing renewable energy. Moreover, substantial investments will be crucial for achieving economies of scale in anticipation of the Department of Electricity and Energy’s stated objective to procure gas at a load factor of 50%.
2. Conversion of OCGT Facilities and 3 000 MW Gas to Power: Eskom plans to convert its two Open Cycle Gas Turbine (OCGT) facilities, Ankerlig and Gourikwa, that currently burns diesel to gas, and to set up a 3 000 MW gas-to-power plant in Richards Bay. Reliant on gas, these initiatives will play a crucial role in reducing emissions and stabilising the energy grid. 
3. Addressing the Gas Supply Cliff: The strategy addresses the impending gas supply cliff that threatens South Africa’s industrial gas users. Industrial gas users employ over 70 000 employees directly contribute to 10% of South Africa’s GDP and consume 5-8 GW of power.
4. Regional Cooperation: The strategy emphasises regional cooperation, particularly with Mozambique and Namibia, to develop the natural gas market and drive industrialisation and regional development. 
5. Sectoral Impact: Beyond energy generation, natural gas will be utilised as a chemical feedstock for producing ammonia, urea, methanol, and diesel, benefiting various sectors such as agriculture, mining, and transportation.

The PIC said the approval of the PIC strategy on natural gas occurs at a time when the global energy landscape is undergoing a profound transformation driven by climate change, the need for energy security, and advancements in technology.

"In recent years, natural gas markets have stabilised following periods of volatility, and global energy policies have become increasingly favourable towards natural gas," it said. 

The PIC strategy on natural gas marks a significant milestone in South Africa's journey towards energy security and sustainability.

The PIC said it remains committed to driving investments that support South Africa’s energy security, its decarbonisation efforts, and better regional cooperation.

BUSINESS REPORT